Small business health insurance options: Affordable alternatives to costly major medical plans

Buying the correct health insurance policy is essential for small businesses. Doing so will attract talented employees and retain them long-term while keeping your costs manageable so you can continue to grow your business.

But finding an insurance plan that meets your unique requirements is challenging. There are so many small business health insurance options that you may be stuck with "analysis paralysis" and opt not to offer anything or default to signing up with a major medical insurance plan. Below are the common types of small business insurance:

• Fully Insured: A fully insured plan means the business pays a fixed premium to an insurance carrier like UnitedHealth or Blue Cross Blue Shield, which assumes the risk of paying employee medical claims. You benefit from a fixed cost each month but often have less flexibility in what's covered and potentially higher costs than other options.‍
• Self-Funded: In a self-funded plan, the business pays for employees' medical claims and assumes the financial risk, allocating monthly funds toward these payments. These plans often use a third-party administrator (TPA) for claims processing. Self-funded plans generally have lower costs than fully insured but are at risk of significant or unexpected claims (such as an employee needing surgery).‍
• Level Funded: A level-funded plan is a hybrid in which the business pays a fixed monthly cost to cover expected claims, stop-loss insurance, and administrative expenses. The company can potentially be refunded excess funds if claims were less than planned, but they are generally more complex to administer.‍
• Market Plans: Market plans, also known as individual or small group market plans, are health insurance plans available through state or federal exchanges that small businesses can purchase for their employees.